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Settlement Delays: Know Your Rights

Sep 8, 2017

When you’ve found what you’ve been looking for in a home or investment property, you can’t wait to make it officially yours. After the time and effort of getting finance and processing the transaction, the exciting time arrives to settle.

But what happens when the vendor makes a move to put off that final moment of parting as settlement day arrives?

For a buyer who’s all but ready to move in, a settlement delay is stressful and troublesome, especially if it means your scheduled preparations will be impacted. If you’ve let your old home go, it may even mean you don’t have a residence for a time.

On the flip side, what if you’re the vendor who has found the seemingly ideal buyer… and they suddenly seem to be hesitating at the crucial moment? What can you do next?

1. You can demand interest

As a Seller, if you decide that you can wait for the delay, you can get still compensated for it by requiring the payment of interest for each day the settlement drags on. This is known as penalty interest and can be specified as a condition in the contract of sale. Your conveyancer will advise you on how to charge this to the other party.

2. You can issue a Notice to Complete (only in certain States)

This gives the other party an additional period (generally two full weeks or 14 days) to address any issues hindering the settlement. If he/she is still unable to meet the new date, then you are generally within your rights to terminate the contract and keep/recover the deposit made to secure the property.

3. You can take legal action

While you can’t do this right off the bat, it is an option that is available should the situation worsen. After taking action as per points 1 and 2, if the settlement still does not happen within the agreed period due to delays from the other side, you can try to file a case to force the vendor/buyer to fulfil his/her contractual obligations in relation to the property. For further advice on your rights before taking this step, independent legal advice from a litigation lawyer is recommended.

Of course, you can ultimately choose to be gracious and be understanding if there is a valid reason for the delay and if it won’t take long. In this case, as a Seller, you may choose not to apply any penalties against the Buyer.

Nonetheless, such occurrences prove why it’s important to have a good conveyancer on hand to advise you on whether waiting on the delay is smart and if not, what options are open to you.
Conveyancing laws can vary across states, which is why it’s imperative that you hire someone in your local jurisdiction. And be sure to be organised yourself – procure and/or sign documents promptly to minimise the possibility of delay.

And remember, from a legal standpoint, it comes down to the contract that’s drawn up. Make sure it protects your interests, no matter which side of the transaction you’re on.